UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15595/December 18, 1997
1. SECURITIES AND EXCHANGE COMMISSION v. JEFFREY SZUR, BERTRAM SLUTSKY,
FIRST NATIONAL EQUITY CORP., f.k.a. J.S. SECURITIES, INC., VADIM
KAPLUN, JOSEPH EPSTEIN, CARY WEINSTEIN, DAVID GOLD, RONALD GRAY, ALEX
LEVIN, DIANE LAKIN, ELAINE SZUR, and GEORGE ELIAN; United States
District Court for the Southern District of New York; 97 Civ. 9305.
2. SECURITIES AND EXCHANGE COMMISSION v. GEORGE BADGER, GOLF COMMUNITIES
OF AMERICA, INC., f.k.a. GOLF VENTURES, INC., DUANE MARCHANT, STEPHEN
SPENCER, KARL BADGER, MARION SHERRILL, HARMON S. HARDY, LA JOLLA
CAPITAL CORPORATION, HAROLD B. GALLISON, JR., TERRY HUGHES, MARVIN
SUSEMIHL, DAVID ROSENTHAL, ANDREW SEARS, and WILLIAM SLONE; United
States District Court for the District of Utah; 2: 97 CV 963K
3. SECURITIES AND EXCHANGE COMMISSION v. ANDREW SCUDIERO, ERIC
NICHOLSBERG, DOMINICK CAPUTO, DOMINICK CHIECO, CRAIG MARINO, MAT
MATLES, ANTHONY SELVADURI, MICHAEL DREITLEIN, ANTHONY GIAMBRONE, IAN
HOSANG, and FRANK HARTMANN; United States District Court for the
Southern District of New York; 97 Civ. 9304.
4. SECURITIES AND EXCHANGE COMMISSION v. LEONARD ALEXANDER RUGE, RICHARD
WOLFF, MAC BEAGELMAN, MICHAEL SCOTT SYMONS, RICHARD BALBER, STEPHEN
EVERS, EUGENE FLAKSMAN, MARK FURMAN, ALEX GRINSHPON, DANIEL KOLCHKOV,
JEFF SANDERS, ALEX SOLON, MARK ZABORSKY, and JEFFERY STONE; United
States District Court for the Southern District of New York; 97 Civ.
9306.
5. SECURITIES AND EXCHANGE COMMISSION v. JOSEPH PIGNATIELLO, JOHN FASANO,
JAMES MANAS, ROBERT MARSIK, MARK PIERCE, PETER MAZZEO, and CONSTANCE
PIGNATIELLO; United States District Court for the Southern District of
New York; 97 Civ. 9303.
The Securities and Exchange Commission (Commission) today filed five
(5) federal civil enforcement actions against fifty-eight (58) defendants
in connection with the Commission's ongoing investigations into
manipulation of the over-the-counter markets for "penny stock" or
"microcap" securities. The five actions are the result of an undercover
investigation into illegal practices in the over-the-counter securities
markets conducted by the United States Attorney's Office for the Southern
District of New York (USAO) and the Federal Bureau of Investigation (FBI),
with assistance from the Commission and the National Association of
Securities Dealers Regulation (NASDR). This is the same undercover
investigation that on October 10, 1996, led to arrest of forty-six (46)
individuals, and the institution of administrative proceedings by the
Commission against twenty-nine (29) of the individuals arrested.
In today's actions, the allegedly fraudulent schemes involve: (a)
payments of bribes totalling approximately $3.3 million to brokers who, in
turn, induced their customers to purchase microcap securities; (b)
manipulation of the prices set by market makers for purchase and sale of
those microcap stocks; and (c) material misrepresentations about the
companies that issued microcap securities. The defendants in these actions
include: (a) so-called "stock promoters" who paid the bribes and
manipulated the public markets for microcap securities; (b) individual
brokers and several brokerage firms who received bribes and engaged in
other fraudulent conduct; and (c) senior management of the companies that
issued the securities. In each of these actions, the Commission seeks
permanent injunctions against future violations of the federal securities
laws, court orders prohibiting the defendants from future participation in
offerings of penny stocks, and disgorgement the alleged profits of the
fraudulent schemes, plus pre-judgment interest.
As detailed further below, fourteen of the defendants named in these
actions are, or have been, the subject of parallel criminal proceedings
brought by the USAO involving conduct related to the allegations contained
in the Commission's Complaint's.
1. SEC v. Szur, et al.
The Commission's Complaint, filed in Manhattan, alleges as follows:
Defendants Jeffrey Szur and Bertram Slutsky directed a scheme to
manipulate the market for securities issued by Securitek International,
Inc. (Securitek), a Delaware corporation supposedly engaged in developing
and marketing security systems, during the period from January 1996 through
August 1996. At the time of the fraud Szur was the President and indirect
owner of defendant J.S. Securities, Inc., a registered broker-dealer that
later changed its name to First National Equity Corp. (JSSI), Slutsky was
Securitek's former president and, with his companion, defendant Diane
Lakin, Securitek's largest shareholders. Slutsky paid undisclosed bribes
to Szur and JSSI employees of up to 50% of the proceeds from the sales of
Securitek stock to unsuspecting retail customers. These bribes enabled
Slutsky and Lakin to sell their large block of Securitek stock into an
artificially pumped-up public market. Slutsky and Lakin sold more than 1.5
million shares of Securitek stock for more than $3.5 million, while Szur
and JSSI employees received approximately $1.2 million in bribes from
Slutsky.
Szur recruited defendants Vadim Kaplun and Joseph Epstein to operate a
JSSI branch office located at 63 Wall Street (the 63 Wall Branch) as a
boiler room where registered and unregistered salespersons engaged in
fraudulent, high-pressure sales tactics in the offer and sale of Securitek
stock to retail customers. Szur also recruited defendants Cary Weinstein
and David Gold to operate a JSSI branch office in Westbury, New York (the
Westbury Branch), which also operated as a boiler room, and defendants
Ronald Gray and Alex Levin, unregistered persons, to operate two additional
cold-calling operations to sell Securitek to retail customers. Szur never
identified Gray's and Levin's operations to the NASD as branch offices of
JSSI. Szur purported to be the registered representative for trades
executed by Gray, while defendant George Elian, a registered broker,
purported to be the registered representative for trades executed by
Levin's group. Slutsky paid bribes to Szur, Kaplun, Weinstein, Gold, and
others. Finally, to conceal the scheme, Szur and other JSSI employees
falsified JSSI's books and records and provided false and misleading
documents to the Commission staff.
Based on the conduct described above concerning Securitek, the
Commission alleges that Szur, Slutsky, JSSI, Kaplun, Weinstein, Gold, Gray,
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and Levin violated the general antifraud provisions of the Securities Act
of 1933 (Securities Act), and of the Securities Exchange Act of 1934
(Exchange Act). The Commission alleges that Lakin, Elaine Szur, and Elian
aided and abetted the violations of the antifraud provisions of the
Exchange Act by Szur, Slutsky, and JSSI. In addition, the Commission
charges that JSSI violated the broker-dealer antifraud provisions, the
books and records, and the Commission's "penny stock" rules (Sections
10(b), 15(b), 15(c), 15(g), and 17(a) of the Exchange Act and Rules 10b-3,
15b-7, 15c1-2, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-9, 17a-3, and 17a-4
thereunder). The Commission further alleges that Szur and Elaine Szur are
liable as control persons, pursuant to Section 20(a) of the Exchange Act,
for the above violations of the Exchange Act and related rules by JSSI.
Finally, the Commission alleges that Kaplun, Weinstein, Gold, Gray, and
Levin violated the broker-dealer registration provisions of the Exchange
Act.
On July 31, 1997, the USAO obtained a superseding, 29-count indictment
against Szur, Elaine Szur, Kaplun, Weinstein, Gold, and Gray, in connection
with sales of Securitek stock to JSSI customers (the Securitek Criminal
Action). Defendants in the Securitek Criminal Action are charged with: (a)
conspiracy to commit securities fraud, wire fraud, and commercial bribery;
(b) wire fraud; (c) commercial bribery; (d) creating false books and
records for JSSI; and (e) money laundering. In early August 1997, in
connection with sales of Securitek stock, Slutsky pled guilty to
(a) conspiracy to commit securities fraud, wire fraud, and commercial
bribery; and (b) securities fraud. Of those charged today, six are
awaiting trial on the superseding indictment.
2. SEC v. Badger, et al.
The Commission's Complaint, filed in Salt Lake City, Utah, alleges as
follows:
During the period from early 1993 through early 1996, defendant George
Badger directed a scheme to manipulate the market for securities issued by
defendant Golf Communities of America, Inc., f.k.a. Golf Ventures, Inc.
(GVI) by bribing registered broker-dealers and some individual registered
representatives to sell GVI stock to unsuspecting retail customers, and
causing GVI to file false periodic reports with the Commission and to issue
false press releases to the public. GVI is a Utah corporation primarily
engaged in developing a golf course known as Red Hawk International Golf &
Country Club (the Red Hawk Project).
Badger and his son, defendant Karl Badger, arranged to have bribes
paid in the form of cash payments or free GVI securities to registered
representatives and broker-dealers. In October 1993, GVI paid a $10,000
"consulting fee" to Burnett Grey & Co., at the time a registered broker-
dealer, in exchange for Burnett Grey directing its brokers to sell GVI
stock to its retail customers. That agreement was negotiated by Badger and
defendant Marion Sherrill, the then-President of Burnett Grey. In December
1993, after Sherrill left Burnett Grey, defendant Harmon S. Hardy, the
majority shareholder of Burnett Grey, agreed with Badger to continue to
sell GVI stock to its retail customers. As additional compensation for
Burnett Grey's selling efforts, Badger later arranged for a block of GVI
shares to be transferred to Burnett Grey so that Burnett Grey could meet
======END OF PAGE 3======
its "net capital" requirements and continue to operate as a broker-dealer.
During the period from October 1993 through February 1994, defendant Terry
Hughes and other brokers employed by Burnett Grey caused their customers to
purchase approximately 48,000 shares of GVI stock for approximately
$340,000, pursuant to the agreement between GVI and Burnett Grey.
After Burnett Grey went out of business in early 1994, defendant
Marvin Susemihl introduced Badger to defendant Harold Gallison, the
President of defendant La Jolla Capital Financial Corp. (La Jolla Capital),
a registered broker-dealer, where Susemihl was a registered
representative. Susemihl and Gallison negotiated an arrangement whereby
GVI paid La Jolla Capital approximately $35,000 as a phony "consulting fee"
in exchange for La Jolla Capital directing its brokers to sell GVI stock to
La Jolla Capital's retail customers. During the period from May 1994
through August 1994, La Jolla Capital representatives, including Hughes and
Susemihl, arranged the purchase of approximately 63,000 shares of GVI stock
at an aggregate price of approximately $498,000, pursuant to the agreement
between GVI and La Jolla Capital.
Badger and Karl Badger paid bribes to defendants David Rosenthal,
Andrew Sears, and William Slone, registered representatives associated with
other broker-dealers, who sold GVI stock to their retail customers in
exchange for the payments received from Badger and Karl Badger.
Finally, during 1995 and 1996, GVI failed to disclose in various
public filings and announcements that Badger controlled GVI, making nearly
all important decisions regarding GVI's business activities. In addition,
GVI made material misstatements and omitted critical facts concerning its
principal business -- the development of a residential golfing and
recreational community, the Red Hawk Project, on undeveloped land in
southwestern Utah. For example, in late October and early November 1996,
GVI announced that Granite Construction Corp. (Granite) had "completed 85%
of the mass dirt movement" associated with the Red Hawk Project, "should
complete onsite sewer installation by Wednesday, Oct. 30," and that Granite
had completed installation of certain sewer lines. In fact, Granite walked
off the job in late October 1996, after completing less than 50% of its
scheduled work, because GVI had run out of money to pay Granite.
Defendants Duane Marchant and Stephen Spencer served as GVI's President and
Chief Financial Officer, respectively, at the time that GVI engaged in
these false and misleading disclosures.
Based on the foregoing, the Commission alleges in its complaint that
Badger, GVI, Marchant, Spencer, Karl Badger, Sherrill, Hardy, La Jolla
Capital, Gallison, Susemihl, Hughes, Slone, Rosenthal, and Sears violated
the general antifraud provisions of the federal securities laws. In
addition to the relief the Commission is seeking in all these actions, in
this particular action, the Commission seeks a permanent bar against
Badger, Marchant, and Spencer from serving as an officer or director of any
public company.
In April 1997, Badger pled guilty in the United States District Court
for the Southern District of New York to a four-count information alleging:
(i) conspiracy to commit securities fraud, wire fraud, money laundering and
commercial bribery; (ii) securities fraud; (iii) criminal contempt; and
(iv) perjury.
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3. SEC v. Scudiero, et al.
The Commission's Complaint, filed in Manhattan, alleges as follows:
During the period from late 1995 through October 1996, defendant
Andrew Scudiero directed fraudulent schemes to manipulate the markets for
securities issued by Interactive Information Solutions, Inc. (Interactive),
a New York corporation engaged in developing voice-data technology, and
StockNet, Inc. (StockNet), a Delaware corporation primarily engaged in the
business of developing an internet fantasy stock market game. Scudiero's
schemes involved bribing registered representatives to sell shares of
Interactive and StockNet to retail customers, and controlling the prices
offered for the companies' securities. Scudiero received large blocks of
stock issued by those companies at the time that he arranged for the
securities of those companies to become publicly traded.
In early 1996, Scudiero set up a brokerage operation in New York City
associated with First Liberty Investment Group (First Liberty), a
registered broker-dealer. Because Scudiero had been barred from the
securities industry as a result of his criminal conviction for drug
dealing, Scudiero arranged for defendant Eric Nicholsberg to act as
Scudiero's nominee at the First Liberty branch operation. Thereafter,
Scudiero hired defendants Dominick Chieco, Craig Marino, Mat Matles, and
Raymond Selvaduri as brokers at his First Liberty branch and paid them more
than $100,000 in cash bribes in exchange for selling Interactive stock to
retail customers. Defendant Frank Hartmann, at Scudiero's direction, set
up various bank and brokerage accounts in his name that Scudiero used to
sell Interactive stock and pay cash bribes to brokers. Scudiero determined
the price of Interactive stock and directed the market maker at another
registered broker-dealer to enter quotes for the stock and to purchase the
stock to fill customer orders with Interactive shares held in a brokerage
account controlled by Scudiero. Nicholsberg, Chieco, Marino, Matles, and
Selvaduri sold over 115,000 shares of Interactive to unsuspecting retail
customers for more than $1 million. In addition to retailing Interactive
through his First Liberty branch, Scudiero also bribed defendants Michael
Dreitlein, Anthony Giambrone, and Ian Hosang, who were employed at other
broker-dealers, to sell Interactive stock to retail customers. Dreitlein
and Giambrone sold approximately 95,000 Interactive shares to their retail
customers for approximately $900,000. Hosang sold over 100,000 shares to
his customers at a cost of approximately $800,000.
During September-October 1996, Scudiero paid bribes totalling
approximately $1.5 million to Nicholsberg, Caputo, Chieco, Marino, Matles,
Selvaduri, and Hosang to sell StockNet securities to their retail
customers. These bribes were in the form of both cash payments and
StockNet securities. As a result, over 500,000 shares of StockNet were
sold to retail customers for more than $3 million.
Based on the conduct described above, the Commission alleges that
Scudiero, Nicholsberg, Caputo, Chieco, Marino, Matles, Selvaduri,
Dreitlein, Giambrone, and Hosang violated the general antifraud provisions
of the federal securities laws. The Commission also alleges that Hartmann
aided and abetted Scudiero's violations.
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In April 1997, Scudiero was indicted on three counts of wire fraud and
one count of interstate travel in aid of a fraud in connection with the
Interactive fraud.
4. SEC v. Ruge, et al.
The Commission's complaint, filed in Manhattan, alleges as follows:
From early 1995 through early 1996, defendants Leonard Alexander Ruge,
Richard Wolff, Jeffery Stone, and Mac Beagelman engaged in a fraudulent
scheme to manipulate the market for securities issued by International
Investment Group, Ltd. (IIGR), a Delaware corporation engaged in the
development of telephone technology. At the time, Beagelman was IIGR's
Chairman and one of its principal stockholders. Beagelman negotiated
agreements with Ruge, Wolff, and Stone whereby each of them received blocks
of IIGR stock at the price of $1.00 per share from the company. The stock
was then deposited into brokerage accounts in Canada and the United States,
and customer buy orders were filled with stock from these accounts. Once
the proceeds were sent to the brokerage firms maintaining these accounts,
IIGR received $1 per share, and Ruge, Wolff, and Stone received the
balance, which they used to pay themselves and to pay bribes to brokers who
generated the purchase orders.
Beginning in mid-1995, Wolff paid bribes totalling approximately
$75,000 to defendants Michael Scott Symons, Eugene Flaksman, Mark Furman,
Alex Grinshpon, Daniel Kolchkov, Jeff Sanders, Alex Solon, and Mark
Zaborsky in exchange for these defendants selling IIGR stock to their
retail customers. At that time, Symons, Flaksman, Furman, Grinshpon,
Kolchkov, Sanders, Solon, and Zaborsky worked at Symons Financial Group
(Symons Financial) in Boca Raton, Florida, a branch operation of Investech
Capital Corporation, a registered broker-dealer. During the period from
June to August 1995, these defendants sold approximately 100,000 shares of
IIGR stock to their customers for $230,000. In 1995, Wolff also paid
bribes totalling approximately $9,000 to defendants Richard Balber and
Stephen Evers in exchange for these defendants selling IIGR stock to their
retail customers. At that time, Balber and Evers worked at a branch office
of Meyers Pollock & Robbins, Inc. (MPR), a registered broker-dealer,
located in Hollywood, Florida. Balber and Evers sold approximately 6,800
shares of IIGR stock to their retail customers for $29,000.
In August 1995, Ruge took over the leadership of the IIGR manipulation
scheme from Wolff. Ruge continued to pay bribes to the Symons Financial
brokers through Wolff and, in addition, paid bribes to Stone for sales of
IIGR stock to Stone's retail customers. At that time, Stone was operating
Stone Asset Management, Inc. in Dallas, Texas, as a branch operation of
T.L. Group, Ltd., a registered broker-dealer. During the period from
August to December 1995, Stone sold approximately 200,000 shares of IIGR
for approximately $685,000, and received bribes totaling approximately
$150,000. During the same period, the other broker defendants sold
approximately 200,000 additional shares for approximately $550,000, and
received bribes totaling approximately $175,000.
In December 1995, Stone took over the leadership of the IIGR
manipulation scheme from Ruge. Thereafter, Beagelman paid Stone for retail
sales of IIGR stock by issuing stock at $1.00 per share to Stone, and
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permitting Stone to sell the stock at the market price of $1 1/2 and 2 1/4
per share to customers. During January and February 1996, Stone sold
60,000 IIGR shares to his retail customers for $120,000.
Based on the conduct described above, the Commission alleges that
Ruge, Wolff, Stone, Beagelman, Symons, Balber, Evers, Flaksman, Furman,
Grinshpon, Kolchkov, Sanders, Solon, and Zaborsky violated the general
antifraud provisions of the federal securities laws.
On July 31, 1997, the USAO obtained a superseding indictment against
Ruge, charging him with: (a) two counts of conspiracy to commit wire fraud
and commercial bribery; (b) two counts of wire fraud; and (c) one count of
interstate travel in aid of commercial bribery. On September 30, 1997,
Symons was indicted by the USAO on charges of conspiracy to commit
securities fraud, wire fraud, and commercial bribery, and Stone was
indicted on charges of conspiracy to commit wire fraud and commercial
bribery.
5. SEC v. Pignatiello, et al.
The Commission's complaint, filed in Manhattan, alleges as follows:
From September 1995 through early 1996, defendant Joseph Pignatiello
directed schemes to manipulate the markets for securities issued by
Spaceplex Amusement Centers International Ltd, Inc. (Spaceplex), a Nevada
corporation which operated a family amusement center in St. James, New
York, and America's Coffee Cup, Inc. (ACC), a Colorado corporation that
sold coffee through one supermarket chain in southern California. For both
Spaceplex and ACC, Pignatiello was hired by senior management of these
companies to manipulate the over-the-counter markets for the companies'
common stock in anticipation of making secondary public offerings based on
the artificially pumped-up markets for these securities.
Defendant James Manas was the President of Spaceplex and one of its
principal stockholders. Manas hired Pignatiello to raise the price of
Spaceplex stock to more than $5.00 per share in advance of a proposed $10
million secondary offering. In turn, Pignatiello worked with defendants
John Fasano, Peter Mazzeo, and Constance Pignatiello in connection with the
Spaceplex manipulation. Pignatiello and Fasano contacted an undercover FBI
agent posing as a broker (the Agent) and offered to pay the Agent a bribe
in the form of free Spaceplex stock in exchange for selling Spaceplex stock
to the Agent's supposed retail customers. As part of the Spaceplex
manipulation, Pignatiello directed Mazzeo to become a market maker in
Spaceplex stock. At the time, Mazzeo worked as a trader at Colin, Winthrop
& Co., a registered broker-dealer. Thereafter, Mazzeo followed
Pignatiello's instructions in setting the prices at which Colin, Winthrop
offered to purchase and sell Spaceplex stock, including steadily raising
those prices during the period from early January through mid-February
1996. In addition to directing Mazzeo's operation as a market maker,
Pignatiello and Constance Pignatiello began purchasing Spaceplex stock
through Mazzeo in order to discourage downward pressure on the market price
for Spaceplex common stock. The Spaceplex manipulation scheme slowly
ground to a halt when the Agent refused to carry through on Spaceplex
purchases because Pignatiello, Manas and Fasano failed to provide the Agent
with free-trading Spaceplex stock, and Spaceplex's operating subsidiary
======END OF PAGE 7======
experienced increasing financial difficulties and filed for bankruptcy
protection in April 1996.
In September 1995, defendants Robert Marsik and Mark Pierce hired
Pignatiello to raise the public market price of ACC common stock in advance
of a secondary offering of ACC securities. At the time, Marsik and Pierce
served as directors of ACC and were ACC's principal shareholders. In
addition, Marsik served as ACC's President. From September 1995 through
March 1996, ACC paid Pignatiello a monthly fee for his services and
provided Pignatiello with a small block of ACC stock. In turn, Pignatiello
directed Mazzeo at Colin, Winthrop to act as a market maker for ACC stock
and, through accounts controlled by Constance Pignatiello and himself,
Pignatiello began purchasing ACC stock to absorb the supply of ACC stock
coming into the market. For example, during the period from October 1995
through April 1996, account records show that Pignatiello was responsible
for 94% of all retail purchases of ACC stock. As Pignatiello exerted
control over the supply of ACC common stock, the price of ACC common stock
rose from $.20 in September 1995 to $2.00 per share in May 1996, just prior
to a scheduled secondary offering. The ACC manipulation scheme failed to
achieve its original goals when the secondary offering scheduled for May
1996 was withdrawn by ACC's underwriter and a secondary offering completed
in August 1996 involved much less favorable terms for ACC, Marsik and
Pierce.
Based on the conduct described above, the Commission alleges that
Pignatiello, Fasano, and Manas violated Section 10(b) of the Exchange Act
and Rule 10b-5 promulgated thereunder in connection with their manipulation
of the price of Spaceplex stock. The Commission further alleges that
Pignatiello, Marsik, and Pierce violated Section 10(b) of the Exchange Act
and Rule 10b-5 promulgated thereunder in connection with their manipulation
of the price of ACC stock. Finally, the Commission alleges that Mazzeo and
Constance Pignatiello aided and abetted Pignatiello's violations of Section
10(b) of the Exchange Act and Rule 10b-5 thereunder.
In April 1997, Pignatiello and Fasano were indicted by the USAO on
charges of conspiracy, securities fraud, and wire fraud in connection with
the Spaceplex fraud (the Spaceplex Criminal Action). Manas has pled guilty
to related criminal charges.
____________
In the three administrative proceedings filed on October 10, 1996
against Szur and Slutsky, Scudiero, and Ruge, the Commission's Division of
Enforcement today filed motions to dismiss the proceedings without
prejudice as the result of the civil actions filed today. These three
proceedings, and the others, have been stayed pending the related criminal
actions. The motions to dismiss are pending.
The Commission is continuing its investigation into the conduct first
charged on October 10, 1996. The Commission expresses its appreciation to
the USAO, the FBI, the NASD, the Ontario Securities Commission and the
British Columbia Securities Commission for their assistance in the
investigation of these matters.
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Attached is a detailed description of the defendants charged in the
complaints filed today.
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DESCRIPTION OF DEFENDANTS
1. SEC v. Szur, et al.
þ Szur, age 31, is a resident of Point Pleasant, New Jersey and is
the President of JSSI and owner of JS Holdings, Inc., the owner
of JSSI. Szur is a defendant in the Securitek Criminal Action.
þ Slutsky, age 57, is a resident of Miami, Florida and a former
President of Securitek. On or about August 7, 1997, Slutsky pled
guilty to charges relating to the Securitek Criminal Action.
þ JSSI, is a broker-dealer registered with the Commission pursuant
to Section 15(b) of the Exchange Act and is a member of the
National Association of Securities Dealers ("NASD"). In or about
July, 1997, JSSI changed its name to First National Equity Corp.
þ Kaplun, age 27, is a resident of Staten Island, New York and is a
defendant in the Securitek Criminal Action.
þ Epstein, age 27, is a resident of Coral Springs, Florida. In or
about January through in or about May, 1996, Epstein served as a
branch office manager for JSSI's branch at 63 Wall Street, New
York, New York. In or about January, 1997 through in or about
July, 1997, Epstein was associated with TYM Securities in Miami
Beach, Florida.
þ Weinstein, age 29, is a resident of New York, New York. In or
about August, 1996, the NASD barred Weinstein from associating
with any member firm of the NASD for failure to respond to
requests for testimony and documents made by the NASD. Weinstein
is a defendant in the Securitek Criminal Action.
þ Gold, age 31, is a resident of New Rochelle, New York. In or
about August, 1996, the NASD barred Gold from associating with
any member firm for failure to testify and answer questions in
connection with NASD allegations that an imposter had taken the
Series 7 qualification examination on behalf of Gold in 1994.
Gold is a defendant in the Securitek Criminal Action.
þ Gray, age 38, is a resident of New York, New York. Gray is a
defendant in the Securitek Criminal Action.
þ Levin, age 28, is a resident of Brooklyn, New York. During part
of the relevant time period, Levin ran a cold-calling operation
for JSSI in Brooklyn.
þ Lakin, age 45, is a resident of Miami, Florida. During the
relevant time period, Lakin lived with Slutsky in Newton, New
Jersey. During the late 1980's, Lakin was a registered
representative with Phoenix Securities Group, Inc., a now-defunct
broker-dealer, for approximately one year.
======END OF PAGE 10======
þ Elaine Szur, age 56, is a resident of Point Pleasant, New Jersey.
Elaine Szur is the mother of Jeffrey Szur and, during the
relevant time period, served as JSSI's compliance officer. In or
about April 1992, Elaine Szur lost her license as a Financial and
Operating Principal. Elaine Szur is a defendant in the Securitek
Criminal Action.
þ Elian, age 49, is a resident of Edgewater, New Jersey. During
part of the Relevant Time Period, Elian served as the named
registered representative of JSSI on purchases of Securitek
arranged by Levin's cold-calling operation.
2. SEC v. Badger, et al.
þ Badger, age 67, is a resident of Salt Lake City, Utah. During
the relevant time period, Badger acted as the principal officer
of GVI, making all significant executive decisions. At all
relevant times, Badger was also a large shareholder and President
of Leasing Technology, Inc., GVI's largest shareholder. Badger
has previously pled guilty to charges of bribery and conspiracy
to commit securities fraud; and in an action brought by the
Commission, consented to a permanent injunction barring him from
future violations of the antifraud provisions of the federal
securities laws. In April 1997, Badger pled guilty in the United
States District Court for the Southern District of New York to
charges related to activities alleged in this Complaint.
þ GVI is a corporation organized under the laws of Utah with its
principal place of business in Salt Lake City, Utah.
þ Marchant, age 58, is a resident of Salt Lake City, Utah. From
1993 through 1996, Marchant was President, Chief Executive
Officer and a Director of GVI.
þ Spencer, age 41, is a resident of Salt Lake City, Utah. From
1993 through 1996, Spencer was Chief Financial Officer,
Secretary/Treasurer and a Director of GVI.
þ Karl Badger, age 43, is a resident of Bountiful, Utah. From 1993
through 1996, he worked in GVI's department of Investor
Relations.
þ Sherrill, age 50, is a resident of Monroe, Georgia. From October
1993 through December 1993, Sherrill was President of Burnett,
Grey & Co. ("Burnett Grey"), a now defunct registered broker-
dealer.
þ Hardy, age 68, is a resident of Dallas, Texas. During the
relevant time period, Hardy was the majority shareholder in
Burnett Grey and was registered as its Principal.
þ La Jolla Capital is a corporation organized under the laws of
Nevada with its principal office in San Diego, California and is
a broker-dealer registered with the Commission.
======END OF PAGE 11======
þ Gallison, age 39, is a resident of Las Vegas, Nevada. Gallison
is registered with the Commission as a Principal of La Jolla
Capital.
þ Hughes, age 39, is a resident of San Diego, California. From
September 1992 until early 1994, Hughes was a registered
representative with Burnett Grey. Since that time, he has been a
registered representative associated with La Jolla Capital.
þ Susemihl, age 57, is a resident of Cardiff, California. During
1994, Susemihl was a registered representative associated with La
Jolla Capital.
þ Rosenthal, age 40, is a resident of San Francisco, California.
From 1995 through January 1997, he was a registered
representative associated with InterSecurities, Inc. a registered
broker-dealer. Rosenthal is currently associated with First
Associated Securities Group, Inc., a registered broker-dealer in
San Francisco, California.
þ Sears, age 26, is a resident of Fitchburg, Massachusetts. During
the period from mid-1995 through 1996, Sears was a registered
representative associated with Delta Equity Services Corp., a
registered broker-dealer. Sears is currently associated with
Brookstreet Securities Corp., a registered broker-dealer.
þ Slone, age 55, is a resident of Cheshire, Connecticut. From May
1995 to the present, Slone was a registered representative
associated with Buell Securities Corp., a registered broker-
dealer.
3. SEC v. Scudiero, et al.
þ Scudiero, age 35, is a resident of Queens, New York and was a
registered representative at various broker-dealers from 1985 to
1992. Scudiero has an extensive disciplinary history and was
barred from the securities industry by the NASD on February 11,
1993. Despite this bar, during the relevant time period,
Scudiero associated himself with First Liberty, a registered-
broker dealer. On April 8, 1997, Scudiero was indicted on
charges relating to the facts of this Complaint.
þ Nicholsberg, age 28, is a resident of Brooklyn, New York and was
a registered representative at various broker-dealers from
November 1994 until November 1996. During the relevant time
period, Nicholsberg held the title of office manager for First
Liberty's New York City office.
þ Caputo, age 45, is a resident of New York, New York and was a
registered representative from May 1996 through January 1997.
þ Chieco, age 26, is a resident of Oceanside, New York and was a
registered representative from April 1995 through December 1996.
======END OF PAGE 12======
þ Marino, age 26, is a resident of New York, New York and was a
registered representative at various broker-dealers from 1993 to
April 1997.
þ Matles, age 21, is a resident of Stamford, Connecticut and was a
registered representative at various broker-dealers from August
1994 through October 1997.
þ Selvaduri, age 25, is a resident of Syosset, New York and was a
registered representative at various broker-dealers from August
1995 through April 1997.
þ Dreitlein, age 34, is a resident of Dix Hills, New York and has
been a registered representative at various broker-dealers since
1988 and currently works for Goldis Financial.
þ Giambrone, age 46, is a resident of Dix Hills, New York and has
been a registered representative at various broker-dealers since
1983 and currently works for Goldis Financial.
þ Hosang, age 39, is a resident of Brooklyn, New York and has been
a registered representative at various broker-dealers since 1984.
In October of 1997, the NASD barred Hosang from associating with
any member firm for his failure to cooperate in the NASD's
investigation of Norfolk Securities.
þ Hartmann, age 39, is a resident of Brooklyn, New York and was
employed by various broker-dealers in an unregistered capacity
from July 1994 through October 1996.
4. SEC v. Ruge, et al.
þ Ruge, age 40, is a citizen of Canada who works as a stock
promoter. On October 10, 1996, Ruge was arrested by the FBI and
charged with conspiracy to commit securities fraud. In July
1997, a superseding indictment was obtained, charging Ruge with:
(a) two counts of conspiracy to commit wire fraud and commercial
bribery; (b) two counts of wire fraud; and (c) one count of
interstate travel in aid of commercial bribery, in connection
with the IIGR fraud. United States v. Ruge, 96 Cr. 1068.
þ Wolff, age 42, and is a resident of Boca Raton, Florida, and has
worked for several years in the securities industry as a broker,
trader, and recently as a stock promoter.
þ Beagelman, age 78, and is a resident of Westbury, New York and
was IIGR's president and chairman of the board from around 1978
to 1996. Beagelman now works at Visual Telephone, Inc., located
in South Hackensack, New Jersey.
þ Symons, age 49, is a resident of Boca Raton, Florida, and has
been a registered representative since 1978. During the relevant
time period, Symons was associated with Capital Growth
Management, Inc., formerly known as Investech Capital Corporation
("Investech"), a registered broker-dealer in Atlanta, Georgia,
======END OF PAGE 13======
and operated an office in Boca Raton, Florida under the name
Symons Financial Group ("Symons Financial"). Symons has an
extensive regulatory disciplinary history. On September 30,
1997, Symons was indicted on charges of conspiracy to commit
securities fraud, wire fraud, and commercial bribery, in
connection with the IIGR fraud. United States v. Symons, 97 Cr.
1033.
þ Balber, age 47, is a resident of Hollywood, Florida, and has been
a registered representative since 1986. From July 1993 to
December 1995, Balber was associated with Meyers Pollock &
Robbins, Inc. ("MPR"), a registered broker-dealer, and became
associated with Investech from December 1995 to April 1996.
While registered with Investech, Balber worked at Symons
Financial.
þ Evers, 45, lives in Boca Raton, Florida, and has been a
registered representative since 1991. Evers was registered with
MPR from July 1993 to December 1995, and with Investech from
January 1996 to April 1996. While registered with Investech,
Balber worked at Symons Financial.
þ Flaksman, 25, lives in Brooklyn, New York, and has been a
registered representative since 1992. During all relevant times,
Flaksman was registered with Investech and worked at Symons
Financial.
þ Furman, 32, lives in Pompano Beach, Florida and has been a
registered representative since 1988. Furman was registered with
La Jolla Capital from September 1993 to July 1995. During July
1995, Furman also was registered with Investech. He then was
registered at Euro-Atlantic Securities, Inc. from September to
October 1995. While registered with Investech, Furman worked at
Symons Financial.
þ Grinshpon, 30, lives in Pompano Beach, Florida, and has worked as
a cold-caller at several broker-dealers. During all relevant
times, Grinshpon worked for Investech and worked at Symons
Financial.
þ Kolchkov, 22, lives in Deerfield Beach, Florida, and has been a
registered representative since 1995. Kolchkov was employed by
Investech in September 1995, and became registered in October
1995, remaining at Investech until April 1996. While associated
with Investech, Kolchkov worked at Symons Financial.
þ Sanders, 26, lives in Boca Raton, Florida, and has been a
registered representative since 1995. During all relevant times,
Sanders was registered with Investech and worked at Symons
Financial.
þ Solon, 28, lives in Miami Beach, Florida, and has been a
registered representative since 1991. Solon was registered with
Investech from April to October, 1995 and worked at Symons
Financial.
======END OF PAGE 14======
þ Zaborsky, 31, lives in Fort Lauderdale, Florida, and has been a
registered representative since 1992. Zaborsky was registered
with Investech from April 1995 to October 1995 and worked at
Symons Financial.
þ Stone, age 33, lives in Dallas, Texas and has been a registered
representative since 1986. Stone was associated with TL Group
from 1992 to 1996. While associated with TL Group, Stone
operated an office under the name Stone Asset Management. Stone
has an extensive regulatory disciplinary history. On September
30, 1997, Stone was indicted on charges in connection with the
IIGR fraud. United States v. Stone, 97 Cr. 1034.
5. SEC v. Pignatiello, et al.
þ Joseph Pignatiello, age 51, is a resident of Coral Springs,
Florida. He has previously been convicted and imprisoned for
federal tax law violations, conspiracy, perjury, and obstruction
of justice and has been barred by the Commission from associating
with any broker, dealer, investment adviser, investment company,
or municipal securities dealer. The NASD, has also fined,
censured, and barred Pignatiello from associating with its member
firms. Pignatiello is married to Constance Pignatiello.
þ John Fasano, age 38, is a resident of Hauppauge, New York and the
owner of Growth Capital Consultants, Inc.
þ James Manas, age 44, is a resident of Belle Harbor, New York and
was, at all relevant times, the Chairman and President of
Spaceplex. In November 1997, Manas pled guilty to criminal
charges concerning his participation in the manipulation of
Spaceplex stock described in this complaint.
þ Robert Marsik, age 51, is a resident of Vista, California and
was, at all relevant times, the Chairman and President of ACC.
In February 1997, ACC changed its name to Midland, Inc.
("Midland"). Marsik currently serves as Executive Vice-
President, Chief Financial Officer, and Treasurer of Midland.
þ Mark Pierce, age 40, is a resident of Tucson, Arizona and was, at
all relevant times, a Director and Secretary of ACC. Pierce
currently serves as Secretary of Midland.
þ Peter Mazzeo, age 38, is a resident of Centerport, New York and
was, during 1995 and 1996, a registered representative employed
as a trader by Colin Winthrop & Co. ("Colin Winthrop"). Colin
Winthrop is a registered broker-dealer with offices in Jericho,
New York.
þ Constance Pignatiello, age 42, of Coral Springs, Florida, is the
sole shareholder and officer of SB Technologies. She is the wife
of Joseph Pignatiello. At all relevant times, Constance
Pignatiello controlled several securities accounts, including SB
Technologies, which actively traded Spaceplex and ACC stock.
======END OF PAGE 15======